What’s Topping the Next Israeli PM’s Inbox?

Israel’s next governing coalition will lead a country that is prosperous and militarily strong but faces security, economic, and social challenges. Five experts weigh in on the country’s policy priorities.

CFR fellows and outside experts weigh in to provide a variety of perspectives on a foreign policy topic in the news.

Israelis will vote in snap elections on March 17, but it will take several weeks of negotiations on coalition building before the composition of Israel’s next government—and the prime minister at its helm—is known. Even as many specifics of its agenda will be shaped in this process, any government will face certain common challenges. Five experts weigh in on the pressing diplomatic, geopolitical, and socioeconomic issues.

Robust Military and Economy Belie Vulnerabilities

Israel’s next government will assume the mantle of a strong and prosperous country. While facing a range of security challenges and tremendous regional turmoil, Israel today enjoys a preponderance of power over any likely regional threat or adversarial coalition. Its national economy is robust, and the country’s national cohesion remains exceptionally strong.

Nonetheless, Israel’s overall strategic posture is vulnerable. Its national power and economic strength depend on less tangible factors, such as foreign relations, global alliances, and perceived international legitimacy. The Israeli government formed after the March 17 election will face four significant and interrelated challenges:

First, relations between the Jewish state and the United States, its superpower ally and patron, are poor. Six years of bickering over Israeli settlement activities, Palestinian peace efforts, and the best way to contain if not counter Iran’s nuclear program have challenged bilateral relations. The next Israeli government will need to reestablish its traditional bipartisan base of support in Washington or risk becoming a party to domestic U.S. political squabbles.

Second, Israel sees its largest regional threat coming from an Islamic Republic of Iran that openly calls for its eradication. While continuing to project influence regionally, Iran has advanced its decades-long effort to develop an indigenous nuclear enrichment program. With or without a P5+1 (the five permanent members of the UN Security Council—the United States, China, France, Russia, and UK—and Germany) agreement, Israel will see Iran and its regional allies as the greatest military challenge to its security. Israel’s next government will prioritize countering Iran’s nuclear and regional ambitions.

Third, Israel faces challenges from two different and rival Palestinian leaderships. Israel has fought Hamas, Gaza’s de facto government, in three deadly yet inconclusive rounds of conflict in the last decade. Left isolated and unattended, Gaza could erupt, with violence spilling over into Israel.

Meanwhile, the Palestine Liberation Organization (PLO), which administers the West Bank’s major population centers via the Palestinian Authority, has shifted away from cooperation with Israel toward diplomatic confrontation in international fora, including the United Nations and the International Criminal Court. While Israel has a preponderance of military power, the Palestinians are attempting to level the playing field on the international stage. The PLO also threatens to suspend on-the-ground security cooperation with the Israeli Defense Forces. It is unlikely to desist absent an Israeli government that seeks to make peace and end the occupation of the West Bank.

Fourth and closely related, Israel faces a trend toward international delegitimization in parts of Europe and the United States, where Israel has traditionally enjoyed unrivalled support. The growing perception that Israel opposes Palestinian national aspirations accelerates Israel’s isolation. The next Israeli government will face a Boycott/Divestment/Sanctions movement that is gaining momentum and threatens to take root with a new generation of academics and politicians, among others. Only a credible move to establish two states in the land between the Jordan River and the Mediterranean could help thwart this.

Israel has been largely reactive in the face of the upheavals sweeping the Middle East for the past five years. Yet the enormity of its most critical challenges may force the next Israeli government to adopt new initiatives and a more activist approach.

Israel’s Regional Policy: Beyond Stability

Israel’s approach to the Middle East and North Africa since the beginning of the Arab Spring in late 2010 has been conservative, risk-adverse, and largely in favor of maintaining the status quo, with the country striving to shield itself from the processes of change in the region.

The next Israeli government is also likely to look at the Middle East through a security-and-stability-oriented lens and to focus on keeping upheaval in bordering states from spilling over while avoiding overreach.

Informed by a realist assessment since the Arab Spring, Israel has invested in beefing up security at its borders, deterring non-state armed challengers such as Hamas and Hezbollah, and preserving its security relations with Egypt and Jordan.

This attitude has been shaped by concern for growing regional instability and state weakness. Israel is especially worried about a growing number of “security hotspots” along its borders, from the Egyptian Sinai to the Syrian Golan to an increasingly shaky Lebanon.

Israel’s profound distrust of Iran has also shaped its regional security assessments, with its concerns going well beyond the ongoing U.S.-Iran nuclear negotiations and prospects of Iran acquiring a nuclear bomb. The Islamic Republic’s influence in the Levant has increased in recent years, strengthening Israeli fears about Iran’s bid for limited regional hegemony. Indeed, while Israel sees the emergence of Sunni militant groups like the Islamic State and Jahbat al-Nusra as potential tactical threats, the country is more concerned about the strategic challenge of Iran emerging strengthened in Syria, Lebanon, and Iraq after the Islamic State challenge subsides.

Israel’s immediate neighborhood will continue to be complex and fragile, with Syria continuing to be the epicenter of regional instability. Israel should focus on preventing domestic spillovers by monitoring its borders to prevent cross-border attacks; coordinating, when possible, with its neighbors; keeping challengers at bay; and preventing bilateral relationships from deteriorating. Mindful of its limited diplomatic and “soft” regional power, Israel would be well-advised to avoid direct interference in its neighbors’ domestic affairs.

The next Israeli government should revise some of the principles that have informed the country’s regional approach. First, Israel should move beyond a focus on short-term security threats and move toward examining longer-term strategic trends. For example, the immediate challenges posed by armed groups in Sinai pale in comparison to the impact that the influx of Syrians refugees in Jordan and Lebanon will have on the region.

Second, Israel needs to integrate its conflict management approach with a proactive policy to improve its regional status. To do so and boost its regional economic, political, and security alliances, Israel needs to shift from managing to resolving the Israeli-Palestinian conflict. Restarting political negotiations, revising current policies on Gaza, and reengaging with the Arab Peace Initiative would all be steps in the right direction.

Three Possibilities for Nonproliferation Policy

Fundamental elements of Israeli nuclear and nonproliferation policies have remained constant despite changes in the parties in power over the last thirty years. The two consistent elements are keeping an Israeli nuclear option viable and preventing other Middle Eastern states from acquiring nuclear weapons. Under the so-called Begin doctrine, a right-wing government destroyed an Iraqi nuclear reactor built to produce weapons-grade plutonium in 1981 and a center-left government destroyed a Syrian reactor in 2007. These elements will probably not change whatever the results of the March 17 elections.

However, Israeli governments may differ in the risks they are willing to take, the costs they are willing to incur to implement these policies, and their readiness to adopt arms control agreements to prevent the proliferation of weapons of mass destruction (WMD) in the Middle East.

There are three possible scenarios after the elections:

The first is a narrow right-wing coalition. In that scenario, Israel will likely continue to take tough positions to curb Iran’s nuclear ambitions, including threatening to use military force.

The specific steps this government would consider will depend on the results of negotiations between the P5+1 and Iran. Israel would probably perceive any agreement they might conclude as bad. It would not have the backing of major powers to initiate unilateral military action, but it might try to press the U.S. Congress to foil the agreement. It would also invest intelligence resources in monitoring Iran for violations of the agreement. If the Iran negotiations fail, Israel would resume its public threats to take unilateral military action.

This coalition would take a negative attitude toward arms control initiatives. It would perceive them as instruments to weaken Israel rather than curb proliferation. Israel would show no flexibility in its conditions for the WMD-Free Zone (WMDFZ) conference, and probably prevent it from taking place for fear the forum would single out Israel for its perceived nuclear capabilities.

The second is a narrow center-Left government, which would be more willing to play along with an Iranian nuclear agreement and aim to resume close dialogue and cooperation with Washington. It would be more open to certain arms control initiatives, including the WMDFZ conference, trusting its Finnish facilitator to prevent the forum from singling out Israel and being ready to discuss various subjects in parallel. That might enable a Middle East arms control and regional security process.

The third possible scenario is a broad national unity government. Its positions would fall somewhere in between these other two scenarios, but probably closer to the right-wing one. The differences will probably lie more in its language than the content of its policies.

It’s the Cost of Living

Despite the drama that surrounded Prime Minister Benjamin Netanyahu’s speech to the U.S. Congress on Iran’s nuclear program, the top concerns for Israeli voters, according to polls, are the cost of living and the Israeli economy.

First on the agenda for the next prime minister will be passing a belated budget for 2015, months after the start of the fiscal year. (Israel is now operating on a stopgap budget that does not allow for any major new government contracts.) With GDP-per-capita growth in 2014 slowing to 0.8 percent, Israel faces the difficult task of tightening its fiscal belt even as it deals with ongoing security concerns, likely increased political demand for social welfare programs, and falling demand from struggling European economies, which comprise Israel’s main export markets.

Economic and bureaucratic reform will also be high on the agenda. The cost of housing in particular animates Israelis; it was the trigger for the massive 2011 demonstrations in which hundreds of thousands of protestors, in a country of eight million, demanded policies that would lower costs of living. Indeed, reforms to the Israel Land Authority and planning and zoning processes feature prominently in the campaign of a potential future finance minister, Moshe Kahlon, and are popular among voters. To take these issues on, the government will have to tackle the vested interests of land owners and the housing industry. More audacious still would be a campaign to take on big-business interests in the financial sector and reform the banks.

Israel’s next prime minister will also have to oversee the conclusion of a long-standing dispute between Israeli regulatory authorities—the Antitrust Authority in particular—and the companies that hold the license to Israel’s large gas finds, primarily the Israel-based Delek Group and Houston-based Noble Energy. Resolution of this dispute could allow for Israeli gas to reach the domestic market, and, perhaps, be exported as well, while addressing the legitimate concerns of Israelis over the market dominance of the business partnership.

All these issues will require not only a dynamic finance minister, but determined backing from the prime minister himself in the face of vigorous lobbying. Isaac Herzog, should he pull off an upset, would likely relish the opportunity to turn to domestic and economic issues. But Netanyahu too, as much as he has tried to avoid the economy in this campaign, will also find it atop the agenda of most Israelis the day after the elections.

Yossi Klein Halevi, Senior Fellow, Shalom Hartman Institute, and Author, Like Dreamers: The Story of the Israeli Paratroopers Who Reunited Jerusalem and Divided a Nation

The Failure of Integration

The 2015 elections have been driven not by debate over the Israeli-Palestinian peace process or even a nuclear Iran, but by domestic issues, like the cost of living. Yet these elections are evading Israel’s greatest long-term domestic crisis: the de facto exclusion from the mainstream of the country’s two fastest-growing populations, ultra-Orthodox Jews and Israeli Arabs. Together, they form more than 30 percent of Israel’s population.

To draw ultra-Orthodox Jews into the mainstream, their parties, paradoxically, need to be excluded from the next governing coalition. That would allow the government to complete the process, begun by the last government, of suspending the wholesale exemption of ultra-Orthodox young men from compulsory military service, a step crucial to ending ultra-Orthodox separatism.

Both the right-wing Likud and left-of-center Labor parties intend to include the ultra-Orthodox in the next coalition. The price will almost certainly be reversing progress on military conscription, ensuring that ultra-Orthodox young men remain marginal to Israeli life.

The integration of Arab Israelis into the mainstream depends on Arab parties entering government and participating in the decision-making process. For the first time, all four Arab parties have banded together, to form the Joint List. The parties fear that if they run separately, they might not pass the electoral threshold, which was recently raised to block parties that win less than 3.25 percent of the vote from holding a parliamentary seat.

But even if the Joint List has relative success, Arab politicians will not be included in the next government, even if it is formed by the Left. Rather, the Joint List will in effect grant veto power to Palestinian nationalists and Islamists and defer the emergence of an Arab party whose primary goal is integration.

A government formed by Labor will likely be supported by the Joint List, but from outside the coalition. (Most Arab politicians are as loathe to join a Zionist government as the Zionist parties are to include them.) The trade-off will be more equitable distribution of government resources to the Arab sector. But so long as Arab parties don’t sit in government, even that long-overdue development won’t address the core issue of the place of Arabs in Israeli society.

Here, then, is the paradox of Israeli politics: The ultra-Orthodox, whose integration depends on their exclusion from government, will likely return to the cabinet, while Arab Israelis, whose integration depends on their inclusion in government, will remain outsiders.

Christine Fair, associate professor at Georgetown University’s Edmund A. Walsh School of Foreign Service and expert on South Asian political and military affairs, joins James M. Lindsay to discuss Pakistan’s July 25 election and incoming Prime Minister Imran Khan.